Foreclosures for Sale High in 10 States with Budget Problems

Foreclosures for sale are contributing significantly to the economic challenges faced by 10 U.S. states, according to a report from the Pew Center.

Based on the report, California is not the only state struggling from state budget problems. Nine other states, namely Arizona, Florida,
Michigan, Illinois, Nevada, Oregon, New Jersey, Wisconsin and Rhode
Island are also headed towards economic disaster if interventions are
not adequate.

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The report cited double-digit budget deficits, record-high
unemployment rates, budget constraints and large numbers of
foreclosures as the major reasons for their difficulties.

Susan Urahn of the Pew Center said that California has been in the
spotlight for so long, but other states have been struggling
financially over the past months. She called on the governors and
legislators of the ten states to act quickly to head off economic
disaster because the population and economic production of these ten
states account for over 33 percent of the whole country's output.

Based on Pew Center data,
states have lower tax revenues during and after recessions, but the
current recession has overburdened state governments because of the
sharp rise in number of people needing state services such as health
care, social services and housing.

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The report cited California as having the worst economic situation
largely because of its poor financial management practices. California
also had the highest number of foreclosures in the third quarter, with
more than 250,000 of its residential units notified of foreclosure
actions, almost 51,000 units of which are already foreclosures for sale.

Early this year, California has started implementing measures to
stop its financial hemorrhage, such as cutting allotments to social
services and educational programs, increasing taxes temporarily and
granting stimulus money.

According to Governor Arnold Schwarzenegger, residents of the state
should expect more cuts in services because he expects the budget plan
to be released in January to show a deficit of up to $14.4 billion.

The report also said that the states continue to suffer because they
have been implementing temporary fixes to fiscal problems. For
instance, Michigan, clobbered by the bankruptcy of two Detroit automakers, is still providing tax incentives despite sharp drops in revenues.

Arizona, which has surpassed California in foreclosure rates, has
been considering mortgaging its state buildings and then renting them
while the state recovers. In the third quarter, more than 50,000
residential units in Arizona were in foreclosure, with more than 36,000 units for trustee sale and more than 14,000 already foreclosures for sale.